THE wide variety of races on a typical British card could be consigned to the scrapheap if racecourses fail to agree how to divide up funds from any replacement to the existing levy on betting, which has funded the sport for more than 40 years. Punters would be faced with a diet of low-grade handicaps while owners and trainers struggled to find maiden races in which to run their horses.

This stark prospect arises from a submission delivered to Lord Donoughue, who chairs a group charged with replacing a levy which the Government is determined to abolish. But while the submission signals accord in principle between racecourses and horsemen, the manner in which funds are distributed is likely to stretch the 59-member Racecourse Association to breaking point.

Some tracks are adamant that funds returning to racing from betting turnover should be allocated in relation to how they were raised. In other words, if one track generated 5 per cent of turnover annually, it should receive a similar percentage of the pot. Advocates of “hypothecation” include Arena, proprietor of Britain’s three all-weather tracks, which generate significant betting turnover through their diet of low-grade handicaps.

Critics of hypothecation maintain that cash should be distributed in this way only after the creation of a substantial development fund to support maidens and races over hurdles and fences for novices. In this camp are the likes of Goodwood, Ascot and tracks owned by Racecourse Holdings Trust — among them Aintree, Cheltenham, Newmarket and Sandown Park.

They argue that it is not just maiden and novice races under threat. Conditions races up to group three level, which are integral to the sport’s fabric, could be axed in the scramble for a greater slice of betting turnover. These events are often contested by small fields and/or odds-on favourites, which appeal less to punters but are vital to the development of the racehorse.

One racecourse official opposed to hypothecation said yesterday: “Under the new system, unless a significant development fund is introduced to support non-handicap races, large racecourses will be encouraged to reduce their number and stage handicaps in their place. The consequences will be terrible, but there will be no choice.” The impasse is serious if new arrangements to fund the sport are not to fragment its structure. Argument among racecourses will inevitably centre on the size of the development fund.

Joining racecourses in the submission to Lord Donoughue is the newly-formed Horsemen’s Group. It has been driven principally by owners, who have their own caveats over what percentage of funds distributed to racecourses should be returned to them in prize-money. In the short term, however, the submission to Lord Donoughue demonstrates progress. Even though racecourses and owners are the most influential generators of racing’s rights, they have rarely seen eye to eye.

Michael Harris, chief executive of the Racehorse Owners’ Association, said: “We are pleased to have got the process off the ground. It is early to talk about details like hypothecation, although to have it without balancing factors would be a disaster.” He speculated that a development fund would need to account for between 50 and 60 per cent of the pot once monies had been set aside for the sport’s governance.

Before that debate rages, Lord Donoughue must report to Government with any feasible levy replacement by the end of the year. Bookmakers would then have to agree a value for racing’s combined rights without mounting a legal challenge to their veracity. Such a challenge scuppered the British Horseracing Board’s proposals to fund the sport earlier this year; hence the formation of the Horsemen’s Group.

Despite the obstacles, the feeling persists that racing’s factions can find a way forward. “There is no real alternative,” said Philip Freedman, chairman of the Thoroughbred Breeders’ Association. “That’s what makes me feel that the group will come together.”

• Kieren Fallon was cleared of any wrongdoing at Wolverhampton yesterday after his mount, Fulvio, was caught close home by Cayman Breeze. Fallon was criticised by some punters but, after studying the race, the stewards were satisfied that he rode to the line.